US Mint Limits $1 Coin Orders To $5,000 In Wake of Frequent Flyer Frenzy To Accumulate Miles

It started out innocently enough: The US Mint wanted to get more $1 coins in circulation.  Americans have been slow to give up their dollar bills in favor of dollar coins, and it's in the US Treasury's interest to promote coins over dollars because they don't deteriorate and require replacement as often as paper money does.  (A coin can last 30 years while a bill may be unusable in less than two years.)

So the US Mint launched a program to sell $1 coins commemorating Native Americans in bulk to the public, offering them in quantities of $250 that can be sent directly to your doorstep with no shipping or handling charge.  And you can use your credit card to purchase them.

And that's where frequent flyers, always in search of more miles for less cost, saw an opportunity: Purchase thousands of dollars worth of the coins using a credit card that gives you loyalty points or frequent flyer miles for buying stuff.  So an individual with a credit card linked to, say, Delta Air Lines, could charge $10,000 worth of coins and collect 10,000 frequent flyer miles on Delta (presuming the buyer is receiving one mile for every one dollar spent).  Upon receiving the coins, they could be deposited in a bank account in order to pay that credit card bill.

On-line bulletin boards devoted to the accumulation of frequent flyer miles first disseminated the news--one individual writing on FlyerTalk.com said he'd purchased $800,000 worth of the coins, earning enough miles to circle the globe a couple of times in first class.  (The US Mint said it had no record of such a large order, but pointed out the buyer could have made a number of purchases using different credit cards and different addresses.)

But it was a Wall Street Journal article by Scott McCartney earlier this month really brought the general public's attention to the scheme.  And now the US Mint is limiting sales to 5,000 coins at a time unless you write the US Mint and explain why you need a larger shipment.

And while it isn't illegal to order thousands of dollars worth of $1 coins and them simply take them to the bank, the US Mint's ordering page now says, "The immediate bank deposit of $1 coins ordered through this program does not result in their introduction into circulation, and, therefore, does not comply with the intended purpose of the program." 

So the Mint has inaugurated a 20-box limit on each individual order.  Since each box contains 250, $1 coins, that means the maximum order as of this writing is $5,000.  The Mint also says some credit cad companies may consider the purchases as "cash-equivalent transactions" not eligible for the accumulation of frequent-flyer miles, so proceed under those cautions.